Commercial insurance price increases break records again
Another quarter brings another round of price increases for global commercial insurance. This time, prices jumped by 22% in Q4 of 2020, according to Marsh’s “Global Insurance Market Index.”
The latest increase is the largest since the index was launched in 2012, and it comes on the back of year-on-year average increases of 20% in the third quarter and 19% in the second quarter of 2020.
Nonetheless, there is some good news, as the index revealed that price increases could be starting to plateau for some lines of insurance, but only in certain geographies.
For instance, property insurance, and directors and officers (D&O) insurance pricing in the US is showing signs of moderating increases, and similar patterns can be seen in certain property and casualty lines in Continental Europe, and Latin America and Caribbean (LAC). Marsh noted that regionally, Continental Europe, Asia, and LAC have now experienced moderate levels of price increases for three quarters.
Marsh attributed the average composite price increase in Q4 to rising property insurance rates, as well as spikes in financial and professional lines. Other findings included the following:
- Global property insurance pricing was up 20% on average, dropping slightly from the 21% increase experienced in Q3, though this was balanced out by a larger spike in global financial and professional lines, which were up 47% on average, compared to a 40% increase the previous quarter.
- Casualty pricing was up 7% on average, compared to a 6% increase in the previous quarter.
- Composite pricing in the fourth quarter increased in all geographic regions for the ninth consecutive quarter.
- All regions, except LAC (9%), reported double-digit price increases, with the UK in the lead (44%), the Pacific region close behind (35%), and the US in third place (17%). According to Marsh, the rate of increase in the fourth quarter either declined or remained the same in all regions outside the UK and Pacific.
- Public company D&O coverages continue to see large spikes in rates, especially in key markets like the UK and Australia. While D&O price increases may be moderating in other regions, prices are still up between 25% and 50% in many countries.
“The global insurance marketplace was very challenging in 2020, and we expect these conditions to persist through the first half of 2021,” commented Lucy Clarke, president of Marsh JLT Specialty and Marsh Global Placement. “Although we are seeing signs that price increases are beginning to plateau in some lines, our clients continue to face tough trading conditions. We are committed to presenting all risk mitigation and insurance placement options to our clients, and to offer advice and support as they consider adjusting their insurance buying patterns.”